The number of new companies being created in Britain has suffered its steepest decline since the oil crisis of the mid-1970s, as the recession and lack of credit has stymied would-be entrepreneurs.

Some 372,400 new firms registered with Companies House last year, compared with 449,700 in 2007, a decline of 17.2%.

According to the accountancy firm Wilkins Kennedy, which compiled the figures, the slump is almost twice as severe as the drop during the previous recession, when there was an 8.6% decline in new start-ups in 1991. The drop off was more pronounced in 1974 though, at the height of the oil crisis, when the number of new businesses registrations fell by 36.8%.

Roger Williams, a partner at the accounting firm, said: "It gives you some indication just how unfavourable the climate now is for starting a new business if you have to go as far back as the oil crisis of the 1970s to find a steeper decline in new company formations."

A Bank of England survey last month found that in spite of Gordon Brown's call for more loans, banks further reduced the amount of available credit in the last three months of 2008.

Business secretary Lord Mandelson, who has been looking at helping small and medium-sized companies cope with problems of cash flow, last month set up a £10bn scheme to guarantee 50% of loans to businesses with a turnover of up to £500m a year - thereby securing short-term lending of £20bn for the sector.